Volatility in the agricultural industry presents opportunities as well as challenges, according to David Kohl, professor emeritus of agricultural and applied economics at Virginia Tech. Speaking at the Illinois Land Values Conference presented by the Illinois Society of Professional Farm Managers and Rural Appraisers, Kohl advised that a good manager is poised to capitalize on that volatility.
He expressed optimism about the potential for both personal and business success, cautioning that it is not contingent on size or the next big thing, but rather being a five-percenter, meaning having a slight edge in production, marketing, finance, risk management, and human resources.
Kohl further urged farmers to concentrate on things within their control. "Our agricultural producers have to manage a triple play of prices, interest rates, and sticky inflation," he said, adding that labor productivity, which impacts inflation, is more affected by a work ethic shortage than a labor shortage.
Kohl predicted that inflation, particularly for agriculture, will be sticky, as about 60% of commercial fertilizer is produced in authoritarian regimes and will go to Brazil and Argentina before the US, and about 8 out of $10 spent on farm business is somehow connected to oil.
Kohl also pointed out that geopolitical agendas have a significant impact on prices, especially in recent years since globalization has increased. According to Kohl, China is going to trade with Brazil and Argentina if they have supply, as India is poised to overtake China in population.
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Categories: Illinois, General